Tax relief to employers of domestic workers as a means of addressing unemployment.
Msibi, Thabani Joachim.
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South Africa’s unemployment rate is among the highest in the world. The domestic worker sector pose an opportunity to creating sustainable employment and to date many people still find employment as domestic workers in the country. This presents an opportunity to the government and South African Revenue Services (SARS) to recognise the valuable contribution the employers of domestic workers make to creating employment. By such recognition the government and South African Revenue Services (SARS) should reconsider the negative test of the Income Tax Act under section 23 which prohibits and limits the deduction of the cost of maintenance of the taxpayer that is full-time salaried unless the home of such taxpayer is regularly and exclusively used for the purpose of trade. The initiative to this regard has already been indirectly implemented by the government in that the South African Revenue Services (SARS) has already made the employers of domestic workers responsible to the collection of the Unemployment Insurance Fund (UIF). Similarly, they should allow a claim of the wages paid to domestic workers to be a tax relief to their employers. This is the first study attempting to engage the government on the policy level. The overall aim for the consideration of this study is to determine how the tax relief of a domestic worker wage would contribute to job creation and how will the tax relief benefit both the employer and employee. A tax relief has immediate results as it increases the disposable income of the taxpayer, increases affordability of goods and services which in turn stimulate the economic activity (Altman, 2007). A tax relief to employers of domestic workers could be seen as a clear illustration that job creation filters all policy considerations. This tax relief consideration in itself creates a platform for debate and negotiation that can be interpreted to specific country dynamics. The research instrument and technique used in the study was developed through intense review of literature. Due to limited resources and time constraints the researcher could not access a big enough number of participants which could have otherwise yielded more insightful results. Therefore the current study can be improved by engaging more participants that qualify for the intended research.
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